NOTHING IN THIS absurdist era, when terrorists in motley can veto the powerful desires of powerful nations, seems more ludicrous than the idea of a strategic petroleum reserve.Is it not beneath a great nation to buy up extra oil and pump it back into the ground?
I used to smile at the idea myself. I confess. It sounded like an eccentric granny who is saving tinfoil in her pantry, preparing for the day when tinfoil vanishes. The bigger her ball of tinfoil becomes, the more ridiculous she seems.
How unheroic. A great nation finds it so much more satisfying to do the things which great nations always do to broadcast their powerful intentions. Build more ships and planes, bombs and rockets. Mobilize the young for combat. Deploy the forward battalions. Let no man doubt that we are prepared to fight, if fight we must.
This is approximately how the United States is now responding. This nation will spend a windfall fortune on new armaments in the next five years and, doubtless, that arsenal will make the elder statesmen and war-game intellectuals and warrior columnists feel good again about America. But none of those spent billions, alas, will make our nation more secure against the real danger we face.
We have entered, as I said, an absurdist era. Nothing works fur us the way it once did. And nothing is more absurd -- or scandalous -- than the U.S. government's grand strategy for the Middle East crisis. The government is pumping up its chest, like a tough kid on a playground trying to impress the other kids, hopeful that they will be sufficiently awed not to start a fight. Meanwhile, President Carter and his grand strategic thinkers act like 90-pound weaklings on the much more vital question -- whether the United States will indeed acquire an adequate oil reserve to protect itself against future interruptions in OPEC oil. Our friends, the Arbs, say no, and we supinely acquiesce.
America plays bully boy and at the same time looks like a wimp. Billions for bombs but not a dime for oil security. Is this not absurd?
Thus, I again impose the awesome question: What is the true meaning of "national security" in the 1980s? I don't presume to have a satisfactory answer myself, but I do suggest this: If American policymakers continue to define "national security" in the narrow military terms of the Cold War -- beating the godless Commies in the great global game of empires -- the results are going to be frustrating for America and possible self-destructive. r
As an exercise in free thinking, let's assume that "national security" includes at a minimum a reliable insurance policy against probably nonmilitary events in the coming years, events which will be calamitous if we are not prepared for them. If we are prepared, the republic can respond maturely, survive and even flourish.
One calamitous "event" has happened twice in the last eight years, so it seems reasonable that it may happen again in the coming years -- an abrupt and unpredicted political crisis which leads to cut-off in oil supplies from the Middle East. It hapened in 1973 following the Yom Kippur war and again in 1979 following the Iranian Revolution.
Both times, the industrialized world survived, but the sudden tightening of global oil supplies permitted a dramatic increase in oil prices, with the western allies bidding furiously against one another to secure the mother's milk of modernism, crude oil. Most mainstream experts insist that ever-increasing oil prices are good medicine for us, a proposition too subtle for my understanding. The world economy is now experiencing the side effects of that medicine -- a dangerous trembling -- and now the mainstream experts worry about whether the patient is going to survive.
No one can foretell when or where the next oil interruption may occur, whether it will be deliberate or accidental, whether it will be short-term and bearable or stretch on for many months and lead to economic collapse. Given the fragility of Middle East political relations, prudent men like Sen. Bill Bradley, the young Democrat from New Jersey, make this point: The military build-up by itself will not provide insurance against the impact of an oil-cut off, including another round of zooming prices. Doesn't it make sense to acquire now a petroleum reserve of 1 billion barrels or so, enough to sustain American industry and homes for six months or longer?
Everyone agrees that it does. They've been saying so for years. I recently received another new study prepared by Department of Energy economists who conclude that the most cost-effective strategy for preparing for uncertainties in world oil markets is the rapid build-up of an emergency oil stockpile. Everything else the government is doing, including higher taxes on oil, is less effective and less economical, according to these experts.
Now here is the scandal: The Carter administration has piddled away several billion dollars on this idea of a strategic petroleum reserve, but between mismanagement and timidity, the reserve has accumulated only 91 million barrels. That's about a 15-day supply if we suddently lost all Persian Gulf oil. While the president and Congress are arguing this season over how many extra billions to pump into the defense budget, Carter eliminated the modest appropriation for the oil reserve. Actually, the budget cut is meaningless. After a lot of buffing and puffing, the administration had already decided not to buy any additional oil for the reserve for at least another year. Because the Saudis told us not to.
Presumably, if Carter is reelected he will send his envoys out again next year to ask Sheik Yamani, the oil minister of Saudi Arabia, if it is okay for us to resume filling our oil reserve. Sheik Yamani will probably say no, as he has regularly in the past, and the Carter administration will acquiesce because Yamani is our pal and Saudi Arabia pumps a lot of oil for us and we don't want to upset our pals.
Is this any way for a great nation to behave? The argument against offending the Saudis goes like this: If we start buying oil for the petroleum reserve, the Saudis will lose face among their OPEC brethren and will cut back their generous extra production. The world's oil supplies will be tight again -- thus prices will rise. In the short run, those are reasonable reasons for doing nothing.
But think of the long-run implication. It guarantees that American foreign policy -- whether in the realm of oil or other national interests -- will be subject to direct leverage by the OPEC suppliers, friendly and unfriendly. It also sets us up for a really horrendous price increase at the next cutoff.
Sen. Bradley, trying to redefine "national security" to include nonmilitary threats, has even suggested that perhaps our national plans on oil reserves should be classified as secret. We don't tell the Russians how we are going to cope with World War III. Why should we tell the Arbs how we are going to cope the next time they cut off oil?
An interesting notion. But it reveals the primitive state of our "national security" preparations. Right now, if something calamitous happens, the government has to turn to the oil companies and ask what they are going to do to protect us. Oil companies are as patriotic as the rest of us -- which, means their response is necessarily self-interested. If I were an oil producer, I'm sure I would not behave differently.
I would be in favor of anything that means higher oil prices, just as farmers in Iowa tend to be permamently in favor of higher grain prices. Farmers in Iowa are also permamently suspicious of government-held grain reserves because they know the government can "dump" surplus grain on the market at any time and thus dampen the pressure for rising prices. Oil producers, whether they are foreign or domestic, behave the same way. Thus, in the fall of 1978, the oil companies drew down their own bloated inventories and when the Iranian interruption occurred a few months later, the cushion of surplus was gone. This was good for oil prices and bad for the rest of us.
At present, the world oil market is in another of its periodic "glut" stages, and the private inventories held by the oil companies are at record highs. This leads me to a playful extension of Sen. Bradley's thinking -- a "national security" plan for the cold warriors.
Let the Congress convene in closed sessions and enact secret "national security" legislation which empowers the government to control those oil surpluses held by the companies. Either the government buys the extra oil and pumps it into the strategic reserve. Or it pays the oil companies the cost of maintaining abnormally high inventories -- a national stockpile which we can draw upon in an emergency. If this sounds radical to the free-market apostles, then why are our allies like West Germany doing it?
Cloaked in the secrecy of "national security," the nation's oil reserve can be assembled from both sources -- the private stocks of the companies and the government's own reserve. We don't have to tell Shiek Yamani or his OPEC brethren that we are doing this.In fact, if our reserve is classified top secret it will be against the law to tell them. Any oil company executive who leaks the precious reserve data would be denounced and possibly prosecuted as a corporate version of Daniel Elsberg.
Henceforward, when the Arab cartel tries to tighten the world market in order to raise prices, the United States will have its own counter-leverage -- the ability to dump oil on the market and hold back the price pressures. If a full-scale crisis cuts off Middle East oil, we will suffer through it but we won't collapse.
Presumably, Sheik Yamani will find out what we're doing, just as the Russians usually discover most of our military secrets. But that's okay. Once the strategic reserve exists and is known -- even if it is a known "secret" -- it becomes a new strategic fact in Middle East politics, a way to dampen OPEC price initiatives, an insurance policy against sudden disaster.
Yes, it wil cost a lot of money, billions and billions. But it would cost less than half of what the cold warriors wish to spend on their Strangelovian MX missile system. Oil in the ground, furthermore, is like gold in Fort Knox. No matter what the purchase price, oil can only become more valuable.
Finally, a "secret reserve" will affect American behavior as much as it will influence others. If America is well prepared for predictable calamities, it can respond with confidence and clear thinking, befitting a great nation. If all we have done is to deploy more troops, when calamity comes, that is surely how we will respond.